HEAD-TO-HEAD: HSBC versus JP Morgan

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Conclusion

The HSBC fund receives a four-star Morningstar rating, while the JP Morgan fund has a three-star rating. Both products have an analyst rating of Neutral.

Morningstar’s star rating looks at historical risk-adjusted performance and the analyst rating is based on forward-looking analysis.

Ge explained that a Neutral rating means that Morningstar does not have a strong positive or negative conviction on the funds.

“It means that we do not expect that the funds will significantly outperform or underperform their peers or benchmarks.”

The HSBC fund has been rated Neutral since Morningstar started covering the fund, according to Ge. One factor for the neutral rating is its low tracking error relative to its benchmark and peers.

“So while it may protect during down markets, it may lag peers during other market environments.

“We also need more clarity from the HSBC team about the new management team,” Ge added.

Turning to the JP Morgan fund, Ge said that the product had a higher analyst rating of Bronze and was downgraded when the previous manager, Chang, left the firm.

“It’s mainly about building our confidence in the new duo [before we re-evaluate the fund’s analyst rating.”

That said, Ge does not prefer one fund over the other, adding that both products have different strategies and it depends on the investor’s appetite.

“The HSBC is more conservative and is better at protecting capital during credit downturns. So this is more suitable for investors with a more conservative risk profile.

“Meanwhile, the JP Morgan fund is more flexible and has more levers, such as investing in convertibles and high yield and taking advantage of market rallies. Investors who are looking for a slightly riskier option and additional upside may consider investing into this fund.”

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